America’s Love-Hate Relationship With the 1 Percent

WHY YOU SHOULD CARE

The 2014 election is set to test how much the soaring wealth of America’s elite worries the rest of America, or whether they’re more interested in getting rich themselves.

January 27, 2014

From Davos to Brooklyn, the past months have seen a growing commotion over income inequality: the fact that a handful of the globe’s super-rich (85 people, to be precise) control as much wealth as the world’s 3.5 billion poorest.

It’s a shocking stat and one that is mirrored — though not on quite the same scale — in the United States, where economists have found that the amount of American income earned by the top 1 percent of workers is now at its highest level since before the Great Depression.

A deep dive into public-opinion polling suggests Americans may not resent the fat cats and their bulging bank accounts…

For the Democratic Party, which is looking to hold on to their razor-thin majority in the Senate in November’s midterm election, that’s a travesty — but it’s also an opportunity. Hoping to capture the same zeitgeist that sent populist Democrat Bill de Blasio to an unexpected victory in the New York City mayor’s race in November, and anti-Wall Street crusader Elizabeth Warren to the Massachusetts Senate seat before that, the party is planning to make America’s wealth gap and its threat to the middle class the central plank of its 2014 campaign.

Source Corbis

Given the national mood, that seems like a smart strategy. But a deep dive into public-opinion polling suggests Americans may not resent the fat cats and their bulging bank accounts as much as Democrats seem to think. Put another way, we may not be at risk of the sort of ”progressive war on the American one percent” that octogenerian venture capitalist Tom Perkins warned of in his already infamous Jan. 25 letter to the Wall Street Journal.

”Wealth is something that people in the United States have always been deeply ambivalent about,” says Karlyn Bowman, an expert on politics and public opinion at the American Enterprise Institute, a center-right D.C. think tank. Polls consistently show that a majority of Americans believe the U.S. system unfairly favors the wealthy and that they don’t think the rich pay their fair share in taxes. But a majority of Americans also continue to expect that they or at least their children will be better off financially than their parents, Bowman notes. Call it rags-to-riches, Horatio Alger or the American Dream, but it continues to color the way people in this country think about the infamous 1 percent as well as how they repond to efforts to redistribute wealth.

Awaiting riches

Speaking to reporters at his first cabinet meeting of the year, President Obama told reporters that his aim in 2014 is ”making sure that this is a country where if you work hard, you can make it.”

”We want to maximize the pace of our recovery,” the president said, ”but most importantly, we want to make sure that every American is able to benefit from that recovery, that we’re not leaving anybody behind, and everybody is getting a fair shot.”

Fairness. Hard work. Equal opportunity. These sound like universal American values. And themes Obama plans to hammer hard in his State of the Union speech on Tuesday evening.

…the rich are rich because they are smart and they work really hard…

— Professor Greg Shaw, political scientist at Illinois Wesleyan University

Democrats are counting on those talking points to help them win over struggling middle-class voters who’ve watched bankers and CEOs make a killing on a buoyant stock market, which hit new highs in 2013, even as the labor market and unemployment rates remain sluggish.

But the thing is, Americans embrace another value: getting rich.

And research shows they continue to harbor ”this really ingrained notion that the rich are rich because they are smart and they work really hard,” says Professor Greg Shaw, a political scientist at Illinois Wesleyan University, even though the latest trends show they also have some serious structural advantages working in their favor.

Taking the wealth pulse

According to Gallup’s “mood of the nation” poll conducted in early January, more than half of Americans say “the distribution of income and wealth” is an “extremely” or “very important” issue that U.S. political leaders should address in 2014. But it still ranks below issues like the economy, education, health care, social security, terrorism, poverty and crime that people think politicians need to deal with this year.

65 percent of Americans believe the gap between the rich and everyone else has increased in the last decade.

Americans are also not particularly gung-ho about government solving the problem. The National Opinion Research Center at the University of Chicago conducts a long-running poll that asks people how much they think the government should intervene to help reduce income differences between rich and poor.

”Most people on this question place themselves someplace in the middle,” says Bowman — which has been true every time the poll was conducted between 1978 and 2012. ”In other words, there isn’t a lot of intensity to this.”

That said, concern about the wealth gap has spiked in the last year or so, as the uneveness of recovery from the global financial crisis has become starkly apparent. A new Pew Research Center poll found that 65 percent of Americans believe the gap between the rich and everyone else has increased in the last decade.

Indeed, Shaw and a colleague found in a recent study that the number of Americans who are dissatisfied with the opportunity to get ahead and those who support heavy taxes on the rich have both gone up. But it’s not by nearly as much as might be expected, he said.

Aspirations remain

David Madland, an expert on public opinion and economic policy at the center-left think tank Center for American Progress, believes some of the polling that’s been done doesn’t reflect the depth of people’s concern.

”Americans are deeply concerned about economic inequality and want the government to take action, but if you call it inequality it might not be the top issue,” says Madland. If it’s framed, instead as “your wages are stagnant while CEO wages have skyrocketed,” well, “they’re upset about that.”

He points to de Blasio’s unexpected victory last year as well as President Obama’s re-election — where the incumbent touted his effort to tax high-income earners while making other tax cuts permanent — as evidence that the message has political resonance.

Shaw isn’t so sure.

”I don’t think it’s just a question of wording,” he says of the polling, noting that in survey after survey over time, Americans agree that income distribution should be fairer. ”But when you start putting teeth on those things,” i.e., specific proposals to halt the rise of the rich and boost everyone else, ”people get really queasy.”

Democrats are betting Madland is right and Shaw is wrong, at least when it comes to rallying the Democratic and independent votes they need to keep the Senate from tipping into Republican hands and stymieing Obama’s last two years in office.

Given the spike in the country’s wealth gap and all the public hand-wringing in response, there’s no better environment than the 2014 election to test whether Americans really want their government to rein in the 1 percent — or simply want to be the 1 percent. With 10 months left until the election, it’s time to ante up.